Airbus's Supply Chain Struggles: A Threat to 2025 Delivery Targets and Investor Value

Airbus's May 2025 Delivery Data Signals a Deepening Crisis
Airbus's May 2025 delivery count plummeted to 47 aircraft, marking a stark decline from April's 56 and March's 71 deliveries. This drop, compounded by persistent production bottlenecks, has raised serious doubts about the company's ability to achieve its 7% annual delivery growth target for 2025 (820 aircraft). The A320neo family, its cash cow, produced just 39 units in May, down from 46 in March and 40 in April, leaving 17 engineless “glider” aircraft parked at its facilities. Meanwhile, the A350 program delivered only one aircraft in May—far below its six-per-month target—highlighting a systemic failure to scale production.

Structural Risks: Engine Shortages and Production Gridlock

The root cause of Airbus's woes remains its reliance on Safran and CFM International for engines. The Leap 1A shortage—a critical component for the A320neo—has become a recurring nightmare. Despite CFM's pledge to resolve the issue by year-end 2024, delays persisted into 2025, forcing Airbus to park gliders and miss quarterly targets. Analysts at Forecast International warn that A320neo production may never reach the 75-per-month target set for 2027, with current output stuck at ~40/month.

The A350's struggles are equally alarming. Only one A350-900 was delivered in May, with production hampered by supply chain disruptions and unresolved engine-related issues for the A350-1000 variant. Even the A220 program—a supposed bright spot—remains mired in underperformance, producing just three units in May versus a 14-per-month target by 2026.

Customer Frustration and Financial Fallout

Airlines are growing impatient. Delta Air Lines has 43 undelivered A320neos due to tariff-related disputes, threatening to defer or reject aircraft. Such delays strain relationships and could force Airbus to reallocate planes to non-U.S. buyers, further complicating scheduling.

Financially, the strain is visible. Airbus reported a Q1 2025 free cash flow of €-0.3 billion, driven by inventory buildup to support production. While its €26.9 billion net cash provides a buffer, analysts at Jefferies warn that missing delivery targets could erode EBIT margins and reduce shareholder returns.

Investment Analysis: Sell Now or Wait for Stabilization?

Short-Term Risks:
- Delivery Target Miss: A 7% growth to 820 deliveries now looks highly unlikely given May's decline and ongoing bottlenecks.
- Valuation Pressure: Airbus's stock has underperformed peers (down 8% YTD), and further misses could trigger a selloff.
- Operational Overreach: The Spirit AeroSystems acquisition—a bid to stabilize supply chains—faces IT integration delays, adding to execution risks.

Long-Term Opportunity:
- Supply Chain Hope: If Airbus resolves engine shortages and scales production in 2026, its 8,658-aircraft backlog (as of 2024) could fuel future growth.
- Competitive Edge: Boeing's own 737 MAX production struggles (24 deliveries in May 2025) leave Airbus's narrowbody dominance intact.

Conclusion: A Sell Signal for Bulls, a Value Play for Patient Investors

Airbus's operational execution has reached a critical crossroads. Near-term risks—missed delivery targets, margin pressure, and customer backlash—suggest the stock is overvalued at current levels. Short sellers should capitalize on the uncertainty.

However, long-term investors may find value if Airbus's 2026 production ramp-up materializes. With a backlog that ensures demand for years and a strategic acquisition in Spirit AeroSystems, the company could recover—if it can finally tame its supply chain demons.

For now, the urgency of structural risks demands caution. Investors should reassess their position until Airbus proves it can reliably build planes—and engines—at scale.